Your Plan B journey starts here in 2020

Your definitive beginner’s guide to second residency and citizenship by investment.

INTRODUCTION: WHY READ THIS GUIDE?

Considering getting alternative residency or citizenship by investment, but not sure where to start? You’re not alone – for a large percentage of our clients, it is the first (and likely only) time they’ll be making an investment of this kind, so they typically start out feeling quite unsure of what exactly it is they need.

To help you gain a sense of what’s available on the market, and how to go about identifying the right solution for you and your family, we’ve compiled the below guide to help you navigate Golden Visas and the rest of the Residency and Citizenship by Investment landscape with ease.

Read on for more information, and then contact us to discuss the next steps on your journey towards greater security, freedom and prosperity…

What is a Golden Visa?

Golden Visas are long-stay residency visas, issued to foreign investors who invest in eligible property in another country, under a government endorsed Golden Visa Program. These visas can typically be renewed indefinitely as long as the required investment is maintained, and may eventually lead to citizenship, provided that a number of criteria are met (typically subject to minimum stay requirements, basic language proficiency, and being able to prove genuine ties to the Golden Visas country in question).

In most Golden Visa jurisdictions, investors are required to purchase either residential or commercial real estate with a minimum value. Some programs have more than one minimum value, depending on where the property is situated (e.g. Portugal and Malta).

Countries such as Greece offer investors the ability to invest in a blend of commercial and residential property to the minimum collective value of €300,000.

While this makes the Greek Golden Visa an attractive option, combined with no minimum required annual stays, property growth is relatively low, and the Greek program does not allow you to obtain gainful employment in Greece, and hence it is not exceedingly popular among South African investors.

Some of the most famous property-based Golden Visa countries in the world include Cyprus, Spain, Greece, Portugal and Malta.

WHY CHOOSE A GOLDEN VISA: Golden Visas typically give you the right to settle in a country long term, but only offers citizenship through regular naturalisation, and typically will not give you access to free healthcare and education perks as a non-citizen.

These programs are ideal “Plan B” options for investors who want to have a second home to escape to in the event of instability in their home countries, along with the benefit of greater visa-free travel, as is the case if the Golden Visa is obtained in the EU.

What is Residency By Investment?

Generally speaking, all Golden Visa Programs can be considered to be Residency By Investment Programs, but not all Residency By Investment Programs are Golden Visa Programs. The distinction stems from the type of underlying investment required: Countries such as Slovenia, Italy, Hungary, Latvia, the Netherlands, Ireland and the UK offer investors the ability to gain a residency permit on the basis of a business investment and company formation.

The minimum capital investment required for these programs are frequently advertised to be as low as €50,000, but realistically, in order for the investment to cover the costs associated with maintaining this type of residency, the investment will have to be in the region of €150,000+, depending on the type of investment (e.g. investing in a commercial property share scheme as your company’s core business).

Furthermore, Residency By Business Investment, as a path to second residency, comes with ongoing reporting and business management requirements, so they’re definitely not for everyone. And while the initial low capital layout may be appealing, most applicants find the associated complexity and ongoing residency maintenance costs of up to €8,000 per year somewhat off-putting.

WHY CHOOSE INVESTMENT RESIDENCY: Residency By Investment status typically give you the right to settle in a country long term, but only offers citizenship through regular naturalisation, and typically will not give you access to free healthcare and education perks as a non-citizen. 

These programs are ideal “Plan B” options for investors who want to have a second home to escape to in the event of instability in their home countries, along with the benefit of greater visa-free travel, as is the case if the Golden Visa is obtained in the EU. This option also tends to appeal to entrepreneurs, high-earning digital nomads and business owners seeking to establish a European branch for their business.

What is Citizenship By Investment?

Citizenship By Investment Programs typically offer investors a fast-track route to obtaining second citizenship – some even without the need to become a resident first for a period of time. While these programs are offered by numerous countries around the world, a large percentage of such programs are offered by small autonomous island nations, and in the Caribbean, in particular.

In addition, these programs provided the investor with a second passport, typically with significantly greater visa-free travel rights than that of their primary passport. A number of Citizenship By Investment destinations also feature exceptional tax benefits.

A prime example of this is Vanuatu, a South Pacific island nation that has no wealth, inheritance or business taxes whatsoever.

While these island destinations tend to be idyllic, the cost of living tends to be high, and getting there can entail flights of up to 40 hours or more. In addition, medical and educational option in these countries tend to be limited, making them less attractive for those seeking to actually emigrate. Some of the most famous and established Caribbean Citizenship By Investment Programs include those of St Kitts and Nevis, St Lucia, Antigua and Barbuda, Grenada and Dominica.

Two exceptions to this rule, based amongst other reasons on their geographical location, are Turkey and Montenegro. While the political instability in Turkey may discourage many Western investors, the program is highly popular among Middle Eastern investors and those adhering to the Islamic faith, regardless of their country of origin. Turkey’s passport is not particularly powerful though, and does not offer visa-free access to the EU. And while Turkey scores high as a holiday destination, not everyone wishes to permanently reside there.

In contrast, Montenegro is arguably one of the only countries in the world that can serve both to increase visa-free travel (it has EU visa-free access and is slated to join the European Union by late 2025), and serve as an actual second home destination, being based in southern Europe on the Balkan coast.

It is important to note, however, that Montenegro requires an off-plan property development in hotel projects (€250,000 in the north or €450,000 in the south) along with a government donation (€100,000), whereas Turkey allows you to buy property on the open market, provided that the value is US $250,000 or more.

So if you were to obtain Montenegrin Citizenship By Investment, you’d still need to purchase a property to live in or rent, should you wish to settle there. The Montenegrin property market does offer excellent value for money on the open market, so this should be a very viable solution for citizenship investors wishing to make Montenegro their second home.

WHY CHOOSE INVESTMENT CITIZENSHIP: The overwhelming majority of investors opting for second passports by investment do so either to gain a second passport with greater visa-free travel rights, or to optimize their international tax obligations, or both. Bearers of passports from countries with limited visa-free travel tend to comprise the majority of clients for this kind of product.

While these investors do have the option of settling in their second home country, with all the benefits regular citizens would, they hardly ever do, due to the limitations outlined above.

If you’re wanting to relocate, therefore, a Golden Visa or Residency By Investment Program may be more suitable, though there are exceptions to every rule.

Identifying the best solution for my family

  • I want to actually emigrate: Consider a Golden Visa or Residency By Investment Program, or Citizenship By Investment in Montenegro. View our program pages for Portugal, Spain, Greece, Ireland, the Netherlands and the UK to discover your second residency options.

  • I want a back-up plan, but I don’t want to emigrate (just yet): Consider a Golden Visa Program, or Citizenship By Investment in Montenegro or Grenada (should you wish to gain access to the USA without the option to obtain eventual US citizenship). View our program pages for Portugal, Spain, Greece and Ireland to discover your second residency options.

  • I want to travel internationally visa-free: Consider Citizenship By Investment and a second passport from countries such as Grenada, Montenegro, St Kitts and Nevis, Antigua and Barbuda, St Lucia, Vanuatu or Dominica.

  • I just want to diversify my income currency: Contact us to discover more about investing in UK property. As the world’s top investment property market, the UK is the go-to option for a large percentage of investors seeking stable, significant returns in a first world country.

    Combined with historically low interest rates, access to interest-only mortgages, and a reduced stamp duty holiday until April 2021, now is the best time to invest in UK property in decades. The market value of UK property is growing predictably at around 4% to 5%, with potential yields of 8% to 12%+ with the interest-only mortgage option. Tax efficient structuring can be achieved as well.

    Contact us now to schedule a zoom call with our independent property brokerage partners in the UK and discover why you need to invest in Manchester and Kent today.

DISCLAIMER: The above information does not constitute legal advice, and is intended as general guidance on the topic. The industry landscape is constantly changing, so be sure to seek professional advice about your particular situation before making any decisions about immigration or related investments.

Start getting your family’s Plan B in place today. Contact us now, 24/7